There are two things Finance Minister Bill English dreads most happening this year.

One is discovering that China has a credit and property bubble. The other fear is of a European banking meltdown.

"That is where we source a lot of debt and in 2008 it shut off, and it could shut off again. This time the solutions would be more difficult," he tells the Herald.

After taking over the finance role in the depths of the global financial crisis, in November 2008, Mr English heads into election year confident voters' understanding of New Zealand's vulnerability over private and public foreign debt is strong, and confident there is strong support for the economic direction the Government is taking.

"As you go into election year there is a growing understanding in Government and in the public just what a challenge it is to manage the risks that turn up, the earthquakes and so on, and make sure you are well clear of the danger zone.

"When they see countries they understand like Ireland going broke, they know that's relevant. They are not quite sure how, but they know you don't want to be anywhere near that stuff."

That was quite a contrast to the mood even 18 months ago, he said.

National was heading into election year with a reasonable amount of political capital - "quite a bit of trust in the electorates that John Key isn't going to do anything radical but equally the need for action. "

There would be no election lollies this year, and the public did not want them.

The public sector was now in better shape to handle the financial pressures ahead than it was 18 months ago, and the public wanted to see the Government tightening up in the same way they'd had to do.

"What we are doing is a bit behind a process that they have already been going through, which is being careful with their spending, watching their debt, focusing a bit on the security of their income.

"So we are not running a contrary view about what's needed in the economy. We are running a view where we are quite aligned, and what has been remarkable about economic policy has been the breadth of the consensus."

The tax "switch" (increasing GST to 15 per cent and personal tax cuts) had been quite critical to that.

He spent a lot of time explaining it in a way that "connected to the big picture".

There had been debate about the speed of changes - and most newspaper editors believed the Government was too soft - "but no one is disputing the direction of it."

"We haven't gone in for all this transformational stuff where no one knows what it means. They know what we mean and they understand it and they generally agree with it subject to certain conditions like 'don't rip out my safety net'."

He thinks Labour will accuse National of "cutting everything" but he believed it was out of touch with the public.

There may be a few issues where Labour could generate political pressure, such as education and health spending, but not to the extent it thought it would be able to.

"But we have set a tone there where we are not after short-term savings, we are after longer-term quality decisions and we've demonstrated a willingness to take our time, get ourselves in order and ensure the provision of services at the same time as getting more efficient."

It was important that the Government had kept its undertakings about not touching superannuation, working for families and interest-free student loans.

"Because they are secure about that, they don't see every move to constrain public spending as a threat to them because we are not out there saying "everything is up for grabs and any day now we might be coming for your thing".

Mr English believes the battle lines between National and Labour this year will be drawn on "debt, deficits, savings and growth." The currency and the Reserve Bank would not be big issues, depending on where the dollar was sitting.

Mr English said Labour had misjudged the public mood. It had not achieved the industrial disruption over Government policy it had wanted, the cost of living issues had not taken off with the strength Labour had expected.

"And the Mana byelection basically said the punters understood the tax issues including GST and they weren't going to vote on it."

Labour, he said, was trying too hard.

"It should have gone to the beach, acquired a reputation for being lazy but remorseful.

"The punters would have accepted that. They would have said you know you are irrelevant and you've figured out why I chucked you out."

Then Labour could "come back all fresh and keen in election year, bounce up to 35 per cent and they are away".